Cost Segregation

This blog post has been researched, edited, and approved by John Hanning and Brian Wages. Join our newsletter below.

What is Cost Segregation?

Cost Segregation is a valuable strategy to increase cash flow and reduce income taxes for commercial property owners. The tax benefits of cost segregation can be applied to various types of real estate: apartments, assisted living/nursing homes, auto dealerships, office buildings, restaurants, manufacturing, hotels, medical buildings, retail space and others. The process of Cost Segregation segregating 1245 personal property components 1250 land improvements from the real property of a building, resulting in depreciable lives of 5, 7 and 15 years using accelerated depreciation


Beyond accelerated deductions the Tangible Property Regulations (TPR) allow taxpayers to write off disposed building components as a partial disposition. A cost segregation carves out building components so that a taxpayer can easily identify the deductible cost after a renovation.


Types of Transactions

  • New Construction
  • Property Acquisition 
  • Renovations or Expansion
  • Leasehold Improvements
  • Real Property Step-Up

For more information about our Cost Segregation services:

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December 16, 2025
This guide breaks everything down in clear, straightforward language so you can understand what you qualify for, how these credits work, and how to use them to keep more capital inside your business.
By Automation Links November 25, 2025
Cost Segregation Cost segregation has always been a powerful tax strategy for real estate investors, but the next three years are especially important. Recent tax law changes now allow many investors to take advantage of 100 percent bonus depreciation again. This creates a significant opportunity for anyone who owns residential rentals, commercial buildings, or owner-occupied real estate. If you time your cost segregation studies correctly, you can accelerate years of depreciation into a single tax year, increase cash flow, reduce tax liability, and free up capital to reinvest into new properties. Below is a detailed breakdown of how to unlock bonus depreciation in 2024, 2025, and 2026 with a structured cost segregation strategy.  To explore a study for your property, visit our Cost Segregation Services page.
How a Cost Segregation Study Transforms Real Estate Cash Flow and Tax Liability
By Brad Smith November 25, 2025
Cost segregation reduces taxes, accelerates depreciation, and increases cash flow, with clients saving tens of millions in completed studies.
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